EDHEC study finds strategic allocation key to added FoHF value

By Anonymous

Created 13/12/2005 - 06:11

Fund of hedge funds add value through strategic allocation rather than active management, according to a new study by EDHEC.

Despite institutional investors' growing interest in FoHFs, to date, little attention has been paid to their added value and/or the sources of their added value, despite a distinct lack of transparency and a double-fee structure, which makes them relatively costly investment vehicles.

The new study by Noël Amenc and Mathieu Vaissié of the EDHEC Risk and Asset Management Research Centre, entitled 'Determinants of Funds of Hedge Funds' Performance', has found that 89 per cent of the 100 top funds of hedge funds in the sample turn out to add value at the strategic allocation level, but only 31 per cent at the active management level (20 per cent created value through both strategic allocation and active management).